S9 Ep32: The digital money supply
From VoxTalks Economics by VoxTalks
June 5, 2026 · 27 min · Season 9 · Episode 32
About this episode
This episode discusses the implications of digital money on the banking system with Stephen Cecchetti.
Every day, billions of transactions settle between strangers who have no idea which bank the other uses. That lack of friction is not automatic. Nine-tenths of the money in daily circulation has been created by commercial banks, but it stays trustworthy only because central banks stand behind it, and keep the system in balance. In this week’s episode Tim Phillips talks to Stephen Cecchetti (Brandeis University, CEPR) about what happens when new forms of digital money test that architecture. Cecchetti is one of the authors of the eighth Barcelona Report in The Future of Banking series, part of the Banking Initiative at IESE Business School, just published by CEPR as a free download. Will retail central bank digital currencies, tokenised deposits, and stablecoins upset the delicate balance of system that has been running for decades? Stablecoins, for example, do not create money, but they claim the status of money without the institutional guarantee that makes money trustworthy. Three jurisdictions — the US, the EU, and the UK — are each resolving the same underlying contradiction in different ways. None has fully resolved it. The research behind this episode: Niepelt, Dirk…
People in this episode
Host: Tim Phillips
Guest: Stephen Cecchetti
Topics covered
- digital money
- central banks
- stablecoins
- banking system
- financial transactions
- economic policy
Keywords
- digital currency
- central bank digital currencies
- tokenised deposits
- financial stability
- banking architecture
- money supply
- economic research
Mentioned in this episode
Organizations: Brandeis University, CEPR, IESE Business School, CEPR Press
Books & works: The Future of Banking 8
Places: US, EU, UK
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